Heineken remains weak no. 3 in Czech market after latest acquisition
- March 25, 2008
||company acquisition announced in March 2008
||Drinks Union (Czech Republic), domestic beer producer
||Heineken NV (Holland), no.1 beer producer in Europe
||shareholders of Drinks Union
||to strengthen no.3 market position in Czech Republic
||acceptable valuation, focus on spirits business
||with this acquisition Heinekenâs Czech market share increases to 12%
Heineken deserves high marks for perseverance, in the Czech beer market. Normally a global player would only enter a new market by acquiring a no.1 or strong no.2 player, and try elsewhere if that wasnât possible. By contrast, Heinekenâs climb in the Czech beer market has been slow and painful; a less patient major would have given up long ago. Maybe Heineken will sell out eventually ?
After languishing for nearly a decade with only a 5% share, and a weak brand portfolio, it managed to notch up another 3%, and finally gain a premium brand in Prague, with the acquisition of Krusevice in the middle of 2007. This allowed Heineken to overtake Budvar into no.3 position in that market. Now, it has gained another 4%, and some complementary brands, with the Drinks Union portfolio which includes the Zlatopramen national brand. However, at 12% share itâs still significantly behind the market leaders SABMiller and InBev.
What next for Heineken in the Czech market ? They have a lot of work to do, to integrate their various operations and streamline the cluttered brand portfolio. This effort can be justified so long as the Czech market remains a big and profitable one; but with stagnant growth there, how long will this be the case ? Anticipate Heinekenâs exit, in the next few years, in the context of its focusing on markets in which it has a no. 1 or 2 position.
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